2022 Year-end Review of Our eCommerce Businesses (Part 1)

David 0:00
Are you looking to grow your sales on Amazon? Chances are if you’re not selling on Amazon’s international marketplaces, you are leaving some serious money on the table. What keeps a lot of people from selling internationally are all the confusing hoops you have to jump through to get started. That is why we worked with Kevin Sanderson from maximizing ecommerce on our international expansion. Kevin and his team take care of the details and guide you through the process of expanding so that you can grow your sales and reach new customers. If you’d like to find out if working with Kevin and his team is right for you head over to https://maximizingecommerce.com/fire. Once again that is https://maximizingecommerce.com/fire.

Intro 0:46
Welcome everyone to the Firing the Man podcast a show for anyone who wants to be their own boss. If you sit in a cubicle every day, and to know you were capable of more than join us, this show will help you build a business and grow your passive income streams in just a few short hours per day. And now your host serial entrepreneurs David Schomer and Ken Wilson.

David 1:10
Welcome everyone to the Firing the Man podcast on today’s episode, Ken and I review 2022 In regards to the performance of our E commerce businesses, this year was full of big wins in huge losses, both of which we will be addressing throughout the episode. Ken, what’s going on man?

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Ken 1:28
David, how you doing? Man? I’m excited to be in a podcast studio in share with everyone 2022 results that we hit our goals, did we not? Yeah, it’s been a couple of months since we’ve been in the studio taping. So it just excited to share everything with the listeners today.

David 1:43
Definitely, definitely. So I would say a couple of things at a high level, we’re gonna dive into some detail. But here’s what I’ll say Amazon businesses are doing well, in this post COVID era, we had a lot of people that never had an Amazon Prime subscription that now do. And I think ecommerce is just becoming more of a, a way of life is ordering things online. And I think COVID kind of helped with that. And so we have seen like an overall pickup in terms of volume and shoppers, which I think it has been a good thing. So that’s just kind of a high level observation I have about 2022. But you

Ken 2:21
Yeah, same, you know, the shopping the trend, there’s still a lot of road in terms of like E commerce, retail to e commerce, there’s a lot of road left for to make gains. And it was kind of a, it was a weird year in terms of you know, post COVID Everything is kind of settling down, you know, you had freight going down, but you’ve got a lot lot more competition. So yeah, we it was an interesting year, for sure.

David 2:46
Absolutely. Now, at the beginning of year, we started off by asking ourselves the question, how do we grow these companies, and there’s kind of two avenues that we identified. One was, let’s launch more products, or the other option was let’s expand internationally, let’s go to international marketplaces. And we opted for that second option. And so this year, we expanded into Canada, UK, Germany, as well as Walmart. And boy, has that been an adventure, I would say things have taken, it has been a longer process than I thought it would be. However, now that we’re kind of on the other side of this international expansion, I’m happy that we have but still definitely a lot to learn as we do businesses in these other countries. So what are your thoughts there?

Ken 3:28
Yeah, so you know, like David mentioned, we laid the groundwork and expanded into international marketplaces and Walmart, it was a challenge. But now that it’s done, you know, we can as we launch products, we can plug them directly into many more sales channels than just one. And so it was, although it took a lot of time effort, as well as capital to fund all the inventory for these marketplaces, expands our sales channels going into 2023 and beyond is that as we launch more products, we can plug them right in. And, you know, it adds a lot more diversity to if you’re just adding more products into one sales channel, you’re not as diversified as if you have five sales channels that you’re, you know, you’re plugging products into. So I’m excited we did it and you know, looking into 23 It’ll be exciting to kind of ramp those up and really mature those sales channels.

David 4:19
Absolutely. You know, I think a couple of struggles that came from that as inventory. You know, for one particular brand, we loaded up Walmart because we thought Walmart is going to be the Wild West, we’re going to be able to crush it here. And 365 days later, we were facing long term storage fees, because those products did not sell similarly in some of the International marketplaces. For instance, in the UK where we’re dealing in the British pound we had a huge change in foreign exchange or in currency in the US dollar depreciated. And so we had kind of like set our prices and then left them there for a year the US dollar depreciated against the British pound and we found at the end of the year we were way overpriced. It’s going to take some getting used to dealing and kind of thinking in these different currencies. But overall, I’m glad that we did it. So you know, as we move through this episode, we’re going to talk this is kind of a high level review. But we’re going to talk about some like big initiatives, big things that went on. And so, Ken, what would you say the first, like, big thing was that we did this year?

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Ken 5:17
Yeah, absolutely. One of the big things that we changed was advertising. And we really heavily focused on tacos, which is a measurement that we used to look at never really took action this year, we took action on and essentially, you know, the tacos, reflection of your organic sales versus your advertised sales. And what we found was our tacos was too high, which was impacting our profitability. And so we’ve made some adjustments, pulled some levers and decreased our tacos, which in turn decreased our cut our ad spend by about 70%, across the portfolio companies, which is huge. Now, we took some hit on sales on there, but our profitability increase, which at the end of the day, net profit is what we’re after. That’s the goal is what we’re after, we’re not after, you know, hey, we’re, you know, an eight figure company that’s losing money, we don’t want to be that we want to be a company that is solid and resilient and has as much net profit at the end of the day as possible. I would say one of the major changes this year that we made

David 6:16
absolutely in, you know, one thing that we did was we brought PPC in house, which was helpful, where we have our dedicated PPC Manager that’s working on all of our accounts. And so that was a little bit easier in terms of cutting adspend. Previously, we were working with an agency who were compensated a percentage of our ad spend. And that’s kind of that type of agencies model and found that there’s not necessarily aligned interests. And so we’re happy and speak for myself and say, like, I am glad that we brought it in house. And it’s been nice to put those dollars to work elsewhere in other parts of the business, you know, Amazon’s a pay to play marketplace, but gosh, there are some good keywords there good keywords for your listing that are just too expensive. And it just at the end of the day, that use isn’t worth the squeeze and those kind of an experiment. And I think it works. So

Ken 7:01
absolutely, yeah, no, I’m too happy, or, you know, a couple of other benefits of bringing PPC in houses that, you know, with an agency model, you know, the account managers have, you know, between 10 and 20 accounts, depending on which agency you’re working with. And if they’re working a 40 hour a week, you’re getting not that many hours from them for hours to eight hours of time, at most, right. And now where we have a full time in house PPC Manager, we’re getting 40 hours of work on across all of the portfolio companies and all the marketplaces. And I think that synergy also goes well, in terms of the strategy on keywords and customers. And so yeah, very, very happy. So one thing we’ve added that I’m really excited for, I think it’s going to take, it’s gonna take a while to ramp up email marketing. And so you know, anybody that’s listening to the podcast for a long time knows that, you know, David and I founded several Native Amazon brands, meaning when they started on the Amazon sales channel, and over the years, we’ve matured them and expanded into different sales channels, as we learn and grow in E commerce and email marketing was a gap we had, you know, we dabbled in it before, but we’ve never really focused and put time and energy and capital into it. Well, this year we did, we’re about six months deep into one of our brands, we have a second brand, we’re about a month into it. And we have a third brand that will be online by the end of the year. And we’ve seen tremendous sales velocity coming in from our email marketing efforts. And so it’s nice to know that you know, this will pay dividends years down the road, as we ramp and scale this with email, you can communicate with your customers, you can ask them a question. I mean, there’s this endless options that we can we can use the email marketing for as well as it’s an you know, those emails you own, that’s an asset that you when you if you ever choose to sell your business, that that’s an asset that goes to the table when you’re selling your business. So

David 8:44
absolutely. One other benefit of email marketing that we found was when we went to launch products, we literally picked a couple options and asked our audience, what do you like? What do you like more? What would be like the dream setup for this type of product? And we got great responses. I mean, that’s business one on one is give the people what they want. Yeah. And so that was a great way, you know, he send an email blast out probably got 30 to 50 responses on those inquiries, and they were great, like really good responses, good engagement. And, you know, when we go to launch those products will respond to those people and say, Hey, we took into account your feedback. And here’s what we came up with. And that’s awesome. So I’m really, really excited about that. And I think as we continue to grow those DTC websites that’s going to be crucial is building our audience. So

Ken 9:33
yeah, absolutely. One pro tip there is just to piggyback on what David mentioned, one thing we did and if you’re doing email marketing, and you have a post purchase email flow setup, pop an email in there, you know, two weeks, three weeks down the road, and then ask your customer what other products that they buy that your brand doesn’t offer, and that and then set that it’s an automation flow and you’ll just get a never ending response of product ideas. And once you know if you Welcome all one day, you’ll look at that and say, Oh, I’ve got 17 People wanting this. Well, that’s your next product launch, because people are asking for it. So

David 10:08
absolutely, absolutely. One major initiative that we took on this year. Switching gears is we’ve opened two manufacturing facilities. One we started at the mall, I guess it was towards the tail end of 2021. But really ramped up production are the first manufacturing facilities doing great. When we first started out, to be totally honest with you, we didn’t know what we were doing that we never do. Yeah, we were, we were producing about 1000 units a month, and we had had some machinery breakdown, it was constantly kind of putting out fires. And there’s a lot of points during that where I, you know, we talked like, are we doing the right thing, and we kept moving forward. And that facility that was previously doing about 1000 units a month is now doing about 5000 units a month with the same number of people, we’ve really got our manufacturing processes dialed in, we’ve got backups on machinery, we’ve learned how expensive it is, when the line is shut down. That’s been great. We’re manufacturing products in the USA. And it just it overall is something I’m really, really proud of. And so with the success of that came manufacturing facility number two, which made its first products about five days ago, and so we’re still relatively new to this one. But I’m really excited about what we’ll be able to do and just kind of the benefits of having that in house.

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Ken 11:34
Absolutely. And to kind of expand on what David said, like, we had thought about, you know, what, how can we differentiate ourselves from our competitors. And now whether those competitors are, you know, other DTC brands, or whether they’re Chinese competitors on Amazon, you know, manufacturing your own products, is a is a really, really huge way to differentiate yourself. There’s so many benefits, it’s just like we talked about this all the time, if there’s a if the barrier to entry, there’s not going to be many people that get inside, right, they’re not going to go, they’re not going to figure out how to go over the barrier around the barrier. Well, there was a lot of challenges with manufacturing, but a lot of credit to David, David spent a whole lot of time on this, figuring it out, doing all the modeling, and then just taking action. And so you know, we had hurdle after hurdle after hurdle, but we just solved every problem as they came. And we can go to market with a new product in two weeks. And our competitors cannot do that. And so speed to market is one thing that really is an advantage. And when you self manufacture, as well as quality, you can monitor your own, you know, you can monitor the quality your product, we also have a warehouse now that stores our products. And so if we ever have an issue with something, we just go and fix it, we have our we have everything in one place. So it’s been really nice. I’m excited to continue down this path of of ramping up, you know, manufacturing are in the US and having more control over supply chain from start to finish or from at least from raw material to to end goods. So yeah, that’s a huge win for the portfolio companies this year.

David 13:04
Definitely, if you’d like to hear more about this, I’d encourage you to check out Episode 124, where we document all the lessons that we learned first year manufacturing, if this is something that you’re thinking about, check out that episode. It’s a good one. So moving on. Another thing that we did this year was we hired over the course of 2022, we hired 25 employees, and we don’t have 25 active employees, there have been some that have been part time and have since left. But in total, we made 25 hires and really built out a team and in Episode 138 and 139. We go into detail on every single one of these if you want to hear about the rogue employee that insisted on bringing his gun into my house, check out that episode. Yeah, a lot hiring odd interviews. What have been your thoughts there?

Ken 13:51
Yeah, so it’s this has been one of the most challenging pieces of this year. Also the most rewarding to me, I think like, you know, today is Friday, when we’re taping this, we have our we have our end of the week meeting on Fridays, where the whole team, everybody in the company comes on a meeting and it’s this kind of, you know, talk about how the week went, we discuss wins, how, you know, lots of stuff, and it’s just very rewarding to have everybody in one place. Having fun chatting, talking about goals and seeing a team that’s cohesive, all working together on the same goal. And that was not an easy thing to achieve. It was very difficult. We we got better at hiring, I would say we we sucked at hiring early on. And we’ve made some mistakes there. And we’ve learned and we’ve improved now we have a we have a solid hiring process that’s working well. And so yeah, like David mentioned, we’ve the episodes 138 139 are some pretty cool stories on those episodes if you want to go back and listen, but yeah, there’s at times it’s been a shit show and other times it’s been amazing where things were, you know, David could go on vacation. For two weeks, and things are getting done when he’s gone, and when he comes back things are better than when he left. And that’s kind of our goal is to build a team that can function with or without us and grow the company. And so we’re well on our way of achieving that. And it’s, it’s very rewarding. Our team is awesome.

David 15:19
Absolutely. Another I said in the intro, we’re going to cover big wins, and we’re going to cover huge losses in this next one, I wouldn’t necessarily consider it a huge loss, but it was definitely a bummer. We got sued. And that was, it was scary. Like to be honest with you is scary. Who’s something I’ve personally never gone through. There’s a lot of emotion involved in that something I don’t think people talk a lot about is like, it’s emotionally taxing. And you’re trying to make rational, logical decisions. But you’re also very frustrated and pissed off. Yeah, it was, you know, we go into great detail on this on episode 145. But can’t What were your thoughts there?

Ken 15:57
Yeah. And so like, David, I had never been sued before. I knew I have attorneys in my family. I know people have been sued. And so it was nerve wracking, nerve wracking, lost sleep over it, it definitely was a distraction from, you know, operating the company. And it was all around a negative experience. But also, at the end of the day, we had that experience now. And so we kind of call that what was I can’t remember who I stole this from, but he essentially said, any money that he’s lost or time it’s an education fund, put that in the education fund. And so now, we have that in our education fund, where we’ve learned from that it sucked, it was painful. But we learned from that, and we’re going to be better moving forward on, you know, there was lessons learned there, what to do, what not to do. But the biggest takeaway from that was to I think, we did a really good job, we kept our emotions out of it. And we put the business first and said, you know, like, at the end of the day, the emotion pieces there, like, you know, we wanted to crush somebody, but you know, we had to we had to peel that away and, and professionally, what was best for the company. And for the for the you know, the entire team and the company. And I think we made the right decision there. And that was a pretty crazy experience. So yeah,

David 17:09
absolutely. Now what, what next what? Yeah, there are initiatives that we have going on? Absolutely.

Ken 17:14
And so I’ll bounce this one over to you, David, I’ll speak to a little bit but we focused on profitability. And so 2022 was a lean year in terms of, you know, there was we saw some pullback, you know, there was COVID. And then there’s post COVID. And we saw some, you know, everybody’s kind of maybe it maybe some people kind of going back to retail. And so we’ve seen some some pullback on sales, the longer you’re in this game, more competition, the more everything and so profitability is really we focused a lot on profitability this year. And David, what are what are some things that we drilled into for profitability?

David 17:46
Absolutely, we focused a lot on pricing, how we had our products priced, you know, there’s so many things that are out of our control as Amazon sellers, however, we are in control of price. And this is something that sometimes when you’re launching a product, it’s kind of a finger in the wind, like what price feels right. But we tested, we would move prices around, we do a 30 day look back played around with a couple different software’s are right in the middle of testing a new software right now, which it’s too early to tell whether I can endorse this one wholeheartedly. We’re still learning and still looking forward to doing some look backs on it. But that was something that we did that I think really helped out with the with the profitability. The other thing that we did was, we made it a point once a month to look through all of our expenses. And this is something that’s not exciting. It’s kind of boring. But the number of like software subscriptions, or things that just auto renew once a year that we caught allowed us to be a lot more lean, and cut out like any wasteful spending. And I think that that’s just good business hygiene, it was something that I think moving forward, we’re gonna continue to do this. It’s easy to let that one slip. But I think if you’re a business owner, it’s your responsibility is to make sure you have a good idea of all the expenses running through your business. So you know, we talked about cutting down ad spend. So I’m not going to go into a ton of detail here. And so I think the last thing is, is we’re implementing a process for inventory and inventory management, specifically retiring products. We’ve talked about kind of killing our babies in that like we launch a product, it doesn’t go well. What do you do with that? Well, we put in a process very recently, where we’re doing heavy discounts on pricing is going to generate cashflow, not necessarily profitable sales, but But it’s going to help us kind of get rid of that inventory, liquidate that inventory and move on so we can focus on our high performers. And so that’s something that inventory management is very important in this industry. And it’s something that we’re we’re trying to strike that balance between never going out of stock and carrying way too much inventory and that is a delicate balancing act, especially when you have lead to I have 120 days out of China, it makes it tough to react. And so that’s one of the reasons that we like having manufacturing on US soil is that 120 days can be cut down to 10, in some instances shorter because we have full control over manufacturing. Yeah, the next one. And can I’m gonna, I’m gonna let you start with this one, we implemented the Entrepreneurial Operating System from the book traction to talk about that. Yeah, absolutely.

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Ken 20:25
And so EOS. So traction, if you haven’t read the book, go grab it and read it. If you’re, you know, if you’re a couple years into your business, and maybe you have a small team, it’d be could be very helpful for you, I think I’m trying to remember off top my head, Gina Whitman, I think wrote the book traction side of it, he describes Eos, which stands for entrepreneur operating system and the high level, it’s just basically an organized system of processes to how an entire business should function together and keep everybody on task, as well as there’s an entire planning and review. And it’s done weekly, monthly, quarterly and annually. And so by implementing all of these, this structure into your business, it essentially is like the heartbeat of your business. It’s a pulse, and it just continuously repeats, and improves that at a high level. Hopefully, I give it justice on the description,

David 21:18
I would agree with you. And you know, one thing that we did, when we started this, we, we decided that we were going to follow the book to a tee, we were going to go through every step, we were going to fill out every worksheet. And once we had done all of that, we could kind of stop and see what we think is relevant, or what we would want to do in future years. One of the things that the books suggested was when you’re planning out your next year, is to have at least a two day off site planning session. And I honestly when I read that, I’m like, I don’t know if we’re gonna do that. Like, why don’t we work from home, we work remotely, why don’t we just do it that way. But we decided to stick to the book. And we did, we got a conference room at a hotel. And we dedicated we shifted all of our meetings in for two days, we were solely focused on mapping out 2023. And that was awesome. And at night, we ate like kings. And like it was fun. It was a fun thing to do. It was exciting. And you know, I’m really glad that we did that. One thing that I’m really glad that we did was we had hired an operations manager to help with this. And this is an area where I think, admittedly, you and I know we’re weak in terms of like structure, like this long term planning in our operations manager is awesome. In his department, he complements our skill sets. And so he helped facilitate this implementation. And I don’t think we would be as far as we are without him.

Ken 22:46
Absolutely. I totally agree. Now, they’re now EOS. If that’s something that you know, you’re you need in your business, something like that, there’s a couple different ways to implement, it can hire like an implementer. And they’ll come in and do that it’s a very costly option. And so we opted, we opted to self implement. And I think the only reason we were successful in doing that is because our operations manager had previous experience with us. And he essentially carried us to be honest, like, and spoon fed everything. And so I would say like from start to finish, it was probably a six month process, we essentially read every chapter in that book and had like book studies, and we documented it was only once we were completely through that book is when we started and then we started slowly. And methodically, we found it to a tee and I think three, four months into having fully implemented and we’re already starting to see the benefits of that. And so I would say that’s one of the highlights of this year in terms of the entire portfolio companies of making making progress that was was implementing EOS. So it was really, really awesome. David, as we’re as we’re kind of looking out into 2023, what are what are some stuff? What are some things in the roadmap we can share?

David 23:55
Yeah, absolutely. So I think that fully implementing this EOS is going to be you know, we kind of started at mid year. And so 2023 is going to be our first full year. And I am really excited about that. You know, one thing that we realized is that our employees like it as well. They know what is expected of them. They know what they need to focus on over the next quarter. And from that standpoint, that’s been great. And so I think that’s going to be an area of focus definitely for the next year.

Ken 24:25
Absolutely. Next thing here. I think David alluded to it earlier, but we’re in the process of building what we’re calling product launch machine. And essentially, you know, we spent the last year focusing on expanding into new sales channels. And we haven’t launched a ton of products. We’ve launched some smart products here and there, but we didn’t have a huge focus on it. And so 23 is going to be a year where we focus a lot on launching products. And were a really, really extensive process. We’re excited to kind of share with everybody when we’re done but we’re calling it product launch machine and it’s from it’s an A to Z just an all inclusive process. CES have taken, you know, of launching products to your into your E commerce business. And so I’m really, really excited about that it’s it’s really going to be the the engine for the company.

David 25:09
Definitely, definitely, I would say one of the last things that we’re going to focus on 2023 is increased engagement with our customers. And I think on Amazon, it’s easy to get caught up in keyword ranking and indexing and PPC. But in reality, on the other side of that transaction, you’ve got customer, you’ve got a human being, you’ve got somebody that you are providing value to that I think we’re, you know, through email marketing, through asking our customers, what do you want through engaging, you know, in our private Facebook, in really asking our customers what they want, and then trying to deliver that I think is going to be really helpful and really fulfilling. And so I think everybody likes a company that listens to their customers. And that’s something that I think we’ve done an okay job of, but I think we’re going to do an even better job of it and 2023 Yeah,

Ken 25:55
absolutely. And one other thing, too, is something to share with the audience’s it’s oftentimes we don’t spend enough time reflecting on our wins, if you haven’t done that in a while, you know, this is a grueling, you know, job, like, you know, it’s a grinding job. And so it’s really, really, myself, I don’t do enough of it, I’m glad we have it, we kind of have it baked into our weekly schedule now to talk about wins in progress. And so if you don’t do that, I would highly recommend finding time in your schedule to sit back and reflect on wins in the progress that you’ve made, because oftentimes, it gets overlooked. And it can really, like, brighten your day and your spirits. And you’re like, oh, yeah, you know, I accomplish that. And we, we did this, and so it’ll help you give you momentum to to accomplish more. Yeah. And the last piece that I have is, you know, make sure you’re having fun while you’re working. And while you’re doing what you’re doing, because you’re doing it for yourself, if you’re an E commerce and you’re building a business, you know, build in some fun build in some things that you like you enjoy, craft your schedule to where, you know, your life is enhanced by it not degraded. And so sometimes it’s we overlook this stuff. And you know, David and I made an effort this year to kind of bake some of that stuff into our schedule, modify it, and just to have fun, and enjoy the time

David 27:17
in terms of like having fun. We had a partner’s retreat, which was a fishing trip down in Arkansas, which is super fun. Yeah. And I remember during that you said, Hey, would you ever be interested in staying in a yurt? And I’m like, hell yeah, that sounds. That sounds freaking awesome. And so yeah, I mean, we could jump on a zoom call, or we could go hang out in the woods in a yurt in and, or go on a fishing trip or whatever. And so glad that we’ve done that. I’m glad that we’re continuing to carve off time for that. And yeah, it’s easy to get stuck in the grind stuck in your office. And what I think what we’ve both found is a lot of our best ideas come when we’re outside the office. And so it’s puzzling why you spend so much freaking time in the

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Ken 27:57
office. Yeah, I totally agree. Like the creative juices come out when you’re relaxed. I think when you’re in the office and all tensed up and focused, for me, at least, but like fishing or hanging out, and then ideas start flowing. And so yeah, that is crucial. But yeah, we’ll have to next year what our what our retreat was, and so if you’ve listened this long, thank you. And if you know you want to share some of your your wins for the year, you know, hit us up on social media, you can hit us up on email, David at Firing the Man or Ken at firingtheman.com. Shoot us over share some of your win, you know, and maybe we’ll we’ll share them on a future episode or something soon to come. I’m gonna be sharing our goals for 23 few weeks, so stay tuned.

David 28:36
Absolutely. All right. Thanks, everyone, for tuning in. And we’ll see you next week. Before you go. Fun fact for all you Amazon sellers out there. When you start selling in international marketplaces, all of your reviews come with you. At the beginning of this year, Ken and I sat down and talked of ways that we could double our businesses in size and landed on international expansion as our number one initiative this year. We partnered up with Kevin Sanderson from maximizing ecommerce and he has made the process an absolute breeze, walking us step by step through the process. If you want to grow your revenue and reach new customers head on over to maximizing ecommerce.com/fire and connect with Kevin Sanderson today. Now back to the show.